Use of Experience Curves
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Transcript of Use of Experience Curves
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LEARNING CURVE
CORE THEME = PRACTICE MAKES MAN PERFECTHERMANN EBBINGHAUS
19th Century German Psychologist
INDUSTRIAL OBSERVATION
1925 Wright-Patterson Air force Base USA
1960s BCG
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AVERAGE COST vs CUMULATIVE OUTPUT
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COST/TIME RELATIONHIGH-VOLUME EFFECT
SHARED EXPERIENCE EFFECT
PRODUCT DEFINITION
COST DATA
MARGINAL VS AVG COST
INFLATION
PLANNING HORIZON
EXTERNAL FACTORS
NONEQUILIBRIUM CONDITIONS
LIMITATIONS
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PRICE AND EXPERIENCE
Price-Cost Curve
MARKET SHARE AND PROFITABILITY
PRACTICALCONSIDERATIONS
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COMPETITIVE IMPLICATIONS
STRATEGIES FOR LEADER
STRATEGIES FOR FOLLOWER
PRACTICAL
CONSIDERATIONS (contd.)
Position Growth Maturity Decline
Leader Price Maintain
SOM
Cut Costs
Follower SOM Hold SOM Withdraw